Home > Political Ranting > Conservative Assault on the Middle Class, Continued

Conservative Assault on the Middle Class, Continued

April 17th, 2007

After Bush fired half of the few IRS lawyers who audit the wealthiest Americans, the IRS is now cracking down on the middle class. The excuse:

Chris Edwards, director of tax policy at the Cato Institute, a libertarian research and advocacy group in Washington, said that Congress is driving the need for more audits. Since 1995, he said, “the Republicans greatly complexified the tax code, contributing to tax evasion and making the I.R.S.’s job more difficult.”

The thing is, Republican meddling with the tax code is almost certainly designed to create loopholes and evasions for the wealthy, so why is the IRS focusing more on the middle class?

Kevin Brown, the I.R.S. deputy commissioner for services and enforcement, said the audits “were out of whack” in 2000, with far too little attention paid to the middle class and to the very highest income generators, those making $1 million or more. “We try to run a balanced audit program,” Mr. Brown said. ….

For taxpayers with incomes above $100,000 the odds of being audited in 2006 were 1 in 59; above $1 million, the odds increased to 1 in 16. People in lower income brackets — those reporting incomes below $25,000 — faced a 1 in 94 chance of being audited.

“Out of whack,” huh? “Unbalanced?” Gee whiz, you don’t think that it’s because you’re much less likely to cheat on your taxes if you make $20,000 a year, do you? How many people who make that much have the chance to cheat, anyway? And how much money could be gained by an audit if the person is avoiding $50 in taxes?

Compare that to people making millions or billions, people who have the resources to commit all kinds of tax fraud, where any one case of evasion could net the government millions of dollars in recovered taxes? The over-$1-million bracket has a higher percentage of audits because that’s where most of the tax evasion takes place. It is proportional; if anything, the wealthy should be audited more, not less.

Meanwhile, the IRS had to be faced with a court order to reveal their numbers on auditing of corporations–and the reason became apparent when the results were released: there was zero increase of time spent auditing corporations. None. In fact, the time spent even decreased in terms of efficiency. Gee whiz, imagine that. The IRS also focused more on small businesses–something which demonstrates how clearly the Bush administration actually wants to protect them. Truth is, they don’t want to protect small businesses; they only want to use small businesses when they have yet another tax cut for the wealthy and for corporations, and they need some sympathetic face to put before the cameras to justify it. But in this conservative era, small businesses are nothing but prey, both to tax collection and to the conservative business model which promotes super-sized businesses using overseas labor and vicious monopolistic practices to destroy small businesses.

Consider this as well: the ranks of auditors is cut down to 13,000 from 17,000, a reduction of 24%, while the number of audits doubled, and the tax code became more complex.

Deputy Commissioner Brown and others said the strategy of pursuing more audits, even if each one receives less time and attention, has proved a success.

But we know what that means: since people in the middle and lower classes can’t afford attorneys like wealthy people can, and given the IRS’s coldly extortionate and imperial authority to destroy people’s lives when they feel like it, less time on each case means that it is more likely that an agent of the IRS will not listen to explanations or rationales, and will instead demand payment and not accept “no” as an answer. It’s easier to be “successful” and collect more money when you can virtually rob people blind at a whim and they have no recourse.

It is also interesting to note that while the number of audits nearly doubled, the chances of middle-class earners (between $25,000 and $100,000) being audited nearly tripled, while:

At the very top, those making more than $1 million a year, the data showed that from 2004 to 2006 the number of audits rose 77 percent, from almost 9,600 to 17,000. But more than half of those audits were only letters asking for documentation.

The IRS is so polite to the super-wealthy, aren’t they? But in the IRS’s defense, maybe it actually isn’t more profitable to go after the rich: after all, over the past six years, Republicans have been assiduous in giving the wealthy every possible tax cut and loophole they could humanly accomplish.

Either way, it boils down to the same thing: conservatives are methodically destroying the middle class, while they are just as systematically transferring wealth from the middle class and the poor to a small number of supremely wealthy individuals.

I would simply comment, “business as usual”–but the fact that this is a trend demonstrates that there had been some progress in the opposite direction, progress which is now being rather thoroughly disassembled.

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  1. Tim Kane
    April 17th, 2007 at 15:53 | #1

    Actually, the only thing holding our society together right now is the alternative minimum tax.

    I don’t know much about income tax and income tax law, but even if you have all those loop holes, once you’ve driven them down past the alternative minimum tax they are no good. So there’s little point in creating all kinds of tax loop holes.

    The problem is that the miminum tax only addresses earnings. People living off wealth (not earnings therefore not working) pay the least amount of taxes.

    A better thing would be for congress to increase the alternative minimum tax, but also increase capital gains tax. A friend of mine who is good with numbers, so good that he doesn’t work anymore, said that if you had one million dollars, and didn’t want to work any more, and were prepared to live off of a measley $70,000 a year alotment against your savings, you would pay less than a thousand dollars a year in taxes (he doesn’t have that much money, but you can be sure he pays little in taxes). It goes up with time, but then so does your estate.

    The system is designed to penalize workers, and pamper the wealthy.

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